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Outlook For Services Sector Remains Positive In 2023-24: RBI

The report states that domestic economic activity does face challenges from an uninspiring global outlook going forward.

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Amid the global economic slowdown, the outlook for India's services sector remains positive in 2023-24, said the Resever Bank of India (RBI) on Tuesday.

In its annual report for the year 2022-23, it stated that real estate and construction have witnessed a revival post-pandemic and are expected to perform well this year also as both demand for and supply of housing remain buoyant.

In the external sector, the current account deficit (CAD) is expected to remain moderate, drawing strength from robust services exports and the salubrious impact of moderation in commodity prices of imports. 

With global uncertainties persisting, foreign portfolio investment (FPI) flows may remain volatile. 

The favourable domestic growth outlook, lower inflation, and business-friendly policy reforms could, however, help sustain buoyant FDI inflows. 

The central bank stated that furthermore, inward remittances are likely to remain robust owing to better growth prospects in the Gulf countries. 

"As a result, external vulnerability risks may ease further during 2023-24," said the bank in its report.

The Foreign Trade Policy (FTP) 2023 announced on 31 March 2023, endeavours to promote an export-friendly environment to nurture comparative advantage; harness the opportunities in bilateral trade agreements to help India participate in global value chains (GVCs) and expand access to markets; and explore more trade in the Indian rupee (INR), RBI said.

With global trade volume growth projected by the World Trade Organisation (WTO) to decelerate from 2.7 per cent in 2022 to 1.7 per cent in 2023, progress on all thrust areas in the FTP would be essential.

Meanwhile, it has projected the real gross domestic product (GDP) growth for 2023-24 is projected at 6.5 per cent with risks evenly balanced.